Aging parents - cost of retirement homes, etc

Most of us is failry young here - is a forum for Financial Independence and Retire Early at the end.
Many of us though have parents that are getting older. Mine fortunately are still very active and are around 65 years old and could retire already since 5 years, which compared to the rest of the population is not bad.

My father particularly had a not so nice experience with altersheim for his father (my grandfather). He was an only child, so the grand parents donated the home with a “cession in usufruct” that ie the grandparents had still a right to use. Grandmother died in 2007 - shortly after grandpa move in my parents home where he stayed 12 years. When the time came for my grandpa to move out from my parents home (they cared for him until he was 95 (!), in 2016) he went to the village retirement home. The monthly payment for his staying were around 8000 chf, - 2300 “Deckungsbeitrag” made for around 5700 chf per month of his own cost. He was lucky he retired in 1980 with a good pension of MIGROS that adjusted the rent to cost of living and he could finance most of it. He didn’t have access to “complementary payment help” (ergänzungleistung) because of how they structured the donation to my parents. Since they kept the right to live (usufruct) the house counted towards the wealth of my grandpa, and thus blocked access to the EL because of the low mortgage. Additionaly they averaged the past 10 years rent/wealth to calculate final cost.

Basically all of this to say that my father, who is 65, is starting to think how to avoid the same mistakes and properly start decreasing wealth etc in order not to pay an astronomic amount for retirement home in ~15-20 years (based on average age of entry). He still very fit, but is already started thinking on it since they take 10 year average.

So in a way, he is “forced” now by 70 to donate away his home to his kids (or if an old person doesn’t have kids, to go and rent somewhere) so that the calculation do not screw a possible retirement home monthly cost for both him and his wife - if both get the maximum monthly cost at the same time, that is up to 12-14k per month that they would have to come up with.

All of this to open up a discussion - I don’t have specific question yet. But it did made me reconsider - is this an hidden cost of owning an home? Are all 65-70 middle class family basically forced to moe to rent in order not to pay full amount of retirement home cost? It gave me lots of things to think about. Death, taxes and all the rest …

Here some links I found on a preliminary search:

10 Likes

Yes, the right to live in the house screws you over (or you children).
Best would be to just give the house to your son, make a rent contract and just not pay the rent.

Also the cost of retirement homes is astronomical, and its in their interest to keep you alive (not: alive, not well/happy) so that the can continue billing you.
Also note that the average lifespan in a retirement home is about 3 Years.

2 Likes

Just to confirm my understanding - Granddad’s “billed amount” was 5700 p.m… With income AHV of about 2000 and pension maybe another 2000-3000?
Of course Granddad still had to pay Krankenkasse and a few other bills.
But still, I see a monthly deficit of “only” 1000-2000.
Average time in such a place is 3 years, although can vary extremely of course.
Makes for a not-crazy amount, which could be covered by savings, no? Even in an extreme 10 years in the heim, say, makes CHF 180k.
Do I understand and calculate correctly?

I know this isn’t about your grandfather now/today, but still, you refer to it like the above was a not-so-nice/negative experience.

I’m not against state “help”, but gifting your Vermögen away at 70 so that the state can later pay your Pflegeheim, I don’t know, we have really done this differently with my parents, as my parents don’t want to depend on the state (and I don’t want that they do either), except in some extreme situation.
We are not rich, but somewhere in the middle/average.

Please understand as an open discussion / opinion exchange, not critiscm.

1 Like

Even if he donates the home now, the state can legally request the receiver to pay for the costs.
https://www.notaires.ch/associations/vaud/faq/19

No clue how much it’s used though.

I suppose the only way is the greyish area of regular small undeclared payments.

Nowadays there are alternate solutions to homes: elder collocations and other shared buildings, home help, exit (which I find good if the elder has had enough, not speaking about optimizing money there)

3 Likes

10 years is the magic number

Everything you want to gift etc. should be done more than 10 years ago. Otherwise, you are screwed. A lot of people rip off the state that way tbh. My sister works in the EL department of ZH and they see that all the time. small millionaires gifting millions of of CHFs (especially real estate properties) to children and relatives to get EL lol…

that’s one of the things that got me thinking. Would that be ethical? Don’t think so.

@rolandinho yes you got it more or less right.
Just to be clear my parents cared for my grandfather for 12 years at home. They never went to any holiday to not leave him alone, until he required too much help to be doable by my parents. He had very unique health situation and nurses etc were always forgetting some details so he was actually best cared at home (not a critic towards the health care people - it was completely unique situation).
Because of this, they could save some of the retirement and finance the deficit when in the retirement home (where he stayed 4 years, until he died not of Covid but still alone because of restrictions in may 2020 :frowning: )

So exactly right, everything went without state support and they were not really planning to circumvent them to get EL.

Nevertheless, it got my father thinking. The expected expenses are going to grow to 12-15k per month in 2035+.
I think my father just worry that it could be catastrophic, but we are just starting discussing it, so there is still time hopefully to plan a bit and reassure him. I guess is streesful to think that you maybe a financial burden for your kids if cost keep exploding.

1 Like

It’s largely a question of social life and other attachments to Switzerland.

A person which does not have a very active social life in Switzerland or strong attachments to the country should seriously consider emigrating in retirement. Why decimate your wealth or figure out schemes to get government handouts when you could be living like a king in another country. Why settle for vegetating in a second-rate retirement home for 8K per month in Switzerland when you could have your own villa and private, full-time caretakers, and actively engage in social life for 2-4K per month elsewhere.

My dad moved abroad again after retiring. His AHV pension, which would not be enough to exist on in Switzerland, is equivalent to a good salary in the country he lives in. So he lives great on that alone, and saves everything else (pension fund, private savings, rents on properties). He can easily afford to come to Switzerland regularly to visit friends/family etc.

7 Likes

My partners dad was in a home in Switzerland, total cost was 8500 CHF per month (think he had to pay about 5K of that himself, the rest the state paid. He is Italian and moved back to Italy late last year into a home there, now total cost per month is about 1500 EUR, which he can easily cover with his Swiss pension.

2 Likes

Keep in mind that they will come for the childrens money if they have more than 250k/500k (single/married) in net worth.

1 Like

Lol the moment my parents take me to court to get money, they’ll never see me again… I don’t owe them, they don’t owe me.

2 Likes

Same here. I’d rather burn my money, hide it in cryptos or move abroad out of reach of Switzerland’s jurisdiction.

Its more likely that your parents will be to ill/ can’t decide by them self anymore, and the state will just knock on your door…

No you got me wrong there. The state will force the kids to cover the expenses of their parents which are surpassing their AHV/BVG.

They will do this with every single person with 250k+ net worth and with married couples with 500k+ net worth.

It’s called “Verwandtenunterstützung”: Providing relatives with financial support: when do family members have to pay? | AXA

7 Likes

I am glad that I have multiple citizenships :stuck_out_tongue: and I don’t think that they will press charges in Japan f. e.

Interesting topic. I was also shocked to discover that the typical Altersheim costs 9’000 CHF per month, and 6’000 you cover yourself. I didn’t know there are some further discounts depending on your wealth.

My grandma is an old people’s home since +/- 2016 in Poland, and there these costs are significantly lower. My mom pays 1’000 CHF. Although I have to say that the conditions are not comparable to Switzerland. The place is clean, they are well fed and have activities, but the place is modest, and there are 2-3 people staying in a single room. But since most of them are in almost vegetative state, demented, not knowing their name or where they are, I don’t think it matters that much.

I wonder how many old people in Switzerland actually consider going abroad to live off their last few years. Personally, I hope before it happens to me, I will be still mentally sharp enough to “pull the plug” on myself :man_shrugging:

This is of course interesting, because Switzerland is one of the few countries where you can “pull the plug” fairly easily (exit etc) something I think would be much more difficult in Poland for instance. You can still come ti Switzerland but you would need somebody to help and organise.
In the case of my grandfather, he was mentally extremely sharp - and still enjoyed eating, seeing us, playing cards and was solving multiple crosswords per day. But he still needed proper facilities and 24/7 care. Exit was not really an option, neither staying home with my parents.

Is there a party or petition to abandon this law? It should neither exist down- nor upwards… Adults shouldn’t be forced to help other adults

1 Like

Imagine you’re 50 years old and ready to FIRE with 2.5 million in assets. Now your parents have to go to a nursing home and they only have a small pension of 5-6k/month. Nursing home costs 15k/month for both of them. As you have a lot of wealth you’ll be forced to cover the missing 9-10k/month.

This is a risk that shouldn’t be ignored in Switzerland.

2 Likes

Or even worse, you FIRE’ed with 2-3 millions and after a few years or so you are suddenly forced to pay 10k/month.

Welcome back at work after a long break. Maybe for a shitty salary or so because you didn’t work for a long time and nobody needs you anymore because you’re already 60 or so. Or maybe welcome in poverty on your own because you suddenly have 120k unplanned expenses every year and your initial fire plans were obliterated and you run out of money much earlier than expected.

Scandalous!

Yes, looks like one needs to have contingency plans in place. Either look that you never have more than 500k wealth on paper, or be ready to pack and move with all the cash to somewhere else were you’re save from the government’s expropriation.

Wrong country.

But what if you’re in the middle of your FIRE journey with 1-1.5 million in assets and not yet ready to stop working? Or you still have kids that are in school? If your parents need the nursing home till you are 65, you’ll never going to retire with more than 500k in assets and not earlier anyway.

2 Likes